Does Democracy Cause Trade Policy Liberalization?

May 6, 2016 - 18:00 - 19:30
Nador u. 9, Faculty Tower
Event type: 
Event audience: 
CEU Community + Invited Guests
Andrew Xiang Li

We would like to cordially invite you to the PolBeRG Seminar, with Andrew Xiang Li, that will take place on Friday (06.05.) 18.00 – 19.30 (FT 908). Andrew X. Li is a PhD Candidate in Political Science in the Joint Degree Program between National University of Singapore and King’s College London. His expertise is in the field of International Political Economy and for this occasion he will present a paper titled: “Does Democracy Cause Trade Policy Liberalization? Unpacking the Black Box of Trade Policy”.


This paper contributes to the ongoing debate on the relationship between democracy and liberalization of international trade. A number of well-known works in international political economy have argued that democracy promotes trade liberalization. However, theseprevious studies have taken trade policy as a whole and largely ignored the sub-dimensions of trade policy. In this paper, we disaggregate trade policy into tariff barrier, trade facilitation and trade openness and argue that democracy reduces trade barrier, promotestrade facilitation but does not make the economy more dependent on trade. We test our hypotheses using a panel of about 150 developed and developing countries from 1974 to 2014 and estimate four equations to obtain four different estimators for each dependent variable of interest. Specifically, we investigate the effects of democracy on tariff barrier, trade facilitation and trade openness using pooled OLS, fixed effect (FE), instrumental variable (IV) and general method of moments (GMM) estimators. Overall, our hypotheses receive good empiricalsupport. With other confounding factors being controlled for, democracy is negatively associated with tariff rate, positively associated with the Logistics Performance Index, but there is no evidence that democracy increases a country’s trade openness.

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Hope to see you all at the seminar!